The Sociodemographic Effects of the Crisis in Mexico

Chapter Ten: The Crisis of the Service Sector in Mexico City, 1960-1988 Gustavo Garza

Introduction

In the half century that passed between 1930-1980, Mexico experienced a dynamic economic expansion with real growth levels in the Gross Domestic Product (GDP) of 3.1% in the 1930s; 5.9% in the 1940s; 6.2% in the 1950s, 7.0% in the 1960s, and; 7.2% in the 1970s.[1] During these fifty years of accelerated economic development, the country's economic structure was profoundly modified changing from the predominance of primary and commercial activities to that of industry and services.

Economic development was increasingly concentrated in Mexico City, whose population rose from 1 million inhabitants in 1930 to 12.9 million in 1980[2]. This rapid growth was driven by the industrialization of the metropolis, which increased its share of national industrial production from 28.5% in 1930 to 48.0% in 1980 (Garza and Aguilar, 1988:187).

In 1982 a profound economic recession caused by the fall in the price of oil and the vertiginous growth of the external debt began and lasted throughout the eighties. Between 1983-1988 the total GDP declined 0.2 percent annually and 0.4 percent in industry. In order to understand the effects of the crisis of the eighties one must view them in the context of the economic boom of 1960-1982. It is especially interesting to understand why Mexico City was so vulnerable to recession in the eighties because in past economic recessions it has been the city least affected by virtue of having the most diverse economic structure in Mexico.

In this study I propose to analyze the structure and dynamics of the service sector in the Metropolitan Area of Mexico City (MAMC), during the periods of the boom and crisis of the national economy[3]. I am particularly concerned with what happened to producer services in order to challenge the hypothesis that they tend to concentrate spatially to a greater degree than other tertiary activities, as one can see in the principal cities of the developed countries that find themselves engaged in a "tertiary revolution" or a dramatic increase in the importance of services in its economy[4].

In order to carry out this study, information at the level of the municpio from the IV, VI, VIII, IX and X commerce and services censuses of Mexico was used. The economic activities under examination are commerce and services in business establishments, and the data considered relate to 1) aggregate value of their sales, 2) the number of employed personnel and 3) the number of establishments. In order to make a reasonable comparison of the 4 censuses possible, I have verified how different economic activities are categorized in each one and standardized them all. Standardization was not possible in some, such as the more highly aggregated "gasolineras and combustibles" (821), which in 1980 and 1988 only include gasolineras, and "department stores" (822), which are not considered as such until 1980. In 1960 and 1970 glassware, china, and home appliances were considered separately but since 1980 they have been categorized under the single label of "household and personal goods" (821). Another important limitation is the exclusion of financial services because it is not included in all the censuses, nor are public social services which are in the economic censuses.

Once the standardization was complete, the resulting information was adjusted using the values of the national accounts. This was necessary because of the significant differences in values in both sources of information. For example, the national Gross Domestic Product of the service sector in 1980 was 4.5 billion pesos (1985=100) according to the census, and 15.9 according to the national accounts, that is, 253.3% higher. The differences are very important, and because of the fact that the system of national accounts contains the most reliable macroeconomic information, the decision was made to adapt the census values to it.

The resulting procedure was the following: 1) I calculated the value of each category of tertiary economic activity, I calculated the value of each activity for the MAMC from the commercial and services censuses, adding the figures of the 16 delegations of the Federal District and the 17 municipalities of the State of Mexico, which in 1980 were defined as "urban" or "conurbados"; 2) the percentage that the sum represented was obtained for each branch of services and standardized to conform to the national accounts. This adjustment retains the level of the MAMC's participation in the economic census's national total, but enhances its absolute value to become perfectly compatible with the national accounts.

The unit of analysis is the Metropolitan Area of Mexico City (MAMC), made up of the 16 delegations of the Federal District and the 17 municipalities of the State of Mexico[5]. The study is divided into 3 sections that analyze the structure, level of concentration and dynamics of the growth of tertiary activities in the MAMC. These are separated into 16 branches that are grouped as production services, consumer services and social services[6].

1. SECTORAL STRUCTURE

Services are produced, distributed and consumed as commodities, just as are material goods, and are subject to the same economic laws. The differentiation between goods and services is useful for classifying activities within the structure of production and analyzing the interrelation among products, their physical characteristics, functions of production, locational characteristics, etc., but are completely comparable in their function as value-creating activities.

The structure of production in Mexico has been transformed since 1930, with reductions of the primary sector in favor of the secondary and tertiary: the secondary increased its participation in the national total GDP from 25.4% in 1930 to 32.6% in 1990, while the tertiary increased its participation from 55.8% to 60.0%. In these 60 years Mexico passed through a stage of development based on industrialization, while the developed countries transformed their structure in favor of services. For example, the U.S. reduced the percentage of GDP of the secondary sector from 38% in 1950 to 33% in 1988, while increasing the percentage of GDP due to services from 55% to 65%.

Services in Mexico have increased their proportion of the gross domestic product from 21.6% in 1930 to 28.3% in 1990, while the share of manufacturing has risen from 12.8% to 18.7%, this is, services are now 50% more important than manufacturing (see Table 1). Mexico City is the center for services of all kinds, and for that reason it is important to understand and interpret the breakdown of service types in the metropolitan zone.

The gross domestic product (GDP) of the MAMC in services was 13,844 billion(1988 constant) pesos in 1960[7]. From 1960 to 1970 it rose 110%, reaching 29,082 billion, and between 1970-1980 it grew 78.5%, to 51,914.7 billion. From 1980 to 1988 it was significantly reduced to 41,701 billion pesos (see Table 2). This decrease of almost 20% of the services GDP reflects the magnitude of the economic crisis the Mexico City suffered during the eighties.

Personnel employed in services in 1960 was 524,000, and increased to 1.72 million in 1980 (see Table 3). During the period of the crisis (1980-1988) a reduction of 81,000 employees took place so that labor force participants in the service sector only amounted to 1.64 million in 1988. What stands out is that a decrease of 20% of the GDP in the sector only brought about a reduction of employment of 4.7%. This implies that the reduction of the value of services occurred in large, capital intensive businesses, that have relatively little labor, and since this is the area where good jobs are produced, the sector as a whole suffered from its inability to create decent jobs with fringe benefits. After absorbing 53,000 new workers annually in 1970-1980, the sector let more than 8,000 go in the years of the crisis from 1980 to 1988.

The number of commercial and service establishments consistently rises from 112,000 in 1960 to 282,000 in 1988 (see Table 4) and so does not show the impact of the crisis. Nevertheless, the amount of GDP per establishment drops abruptly from 222 million pesos annually in 1980 to 148 million in 1988.

In the following section the characteristics of each subsector of services will be examined: its contribution to GDP, the number of employees as well as the number of establishments, but first a few comments about the internal structure of the sector.

In the principal cities of developed countries that are going through an accelerated transformation of their economies to service economies, producer and social services grow most quickly while consumer services declined. Mexico has not followed the same path, even though it is to be hoped that its services associated with capital goods, which historically have grown more quickly than other sectors, may experience a higher rate of growth of producer services, at least in the period of rapid economic growth.

Between 1960-1980 the proportion of the service GDP that was accounted for by producer services went down from 39.4% to 35.4% in Mexico City (see Table 5). If you break down the subsector, an increase in professional and business services is seen, combined with a significant decrease of wholesale commerce and a minor decrease in industrial equipment (line 732). This occurred during an important expansion of all services, and even the two branches that lose share, considerably increase their GDP in absolute terms: services to wholesalers increased from 2,023.7 to 4,826.5 billion pesos, while industrial equipment increased from 2,359.5 to 8,236.9 billion pesos between 1960 and 1980 (see Table 2).

The relative decline in producer services comes from the increased growth of the other branches, since consumer services increased 280% between 1960-1980 (see Table 2). Nevertheless, it is significant that producer services remain important, representing a third of the total value of sales of the service sector in Mexico City.

Consumer services basically maintain their level in the tertiary GDP of the city increasing slightly from 57.4% in 1960 to 58.2% in 1980 (see Table 5), because the subsectors that increased canceled out those that decreased. There are six subsectors with reduced shares, "cleaning and hotel services" being the one that decreased the most. Among the 5 branches that increase their percentage of the GDP, restaurants (preparation of food and drinks) and repair services (the latter of which increased its share from 2.7% in 1960 to 7.6% in 1980) stand out. This expansion of repair services is a result of the growing number of durable goods in Mexican families (televisions, refrigerators, sound systems, VCRs, cars and home appliances), itself a reflection of the improvement in the standards of living during the stage of economic expansion.

The decline in producer services is offset by gains in private social services; in education and in health, which double their participation from 3.2% in 1960 to 6.4% in 1980 (see Table 5). Actually, the numbers underestimate the value of health and education in the services GDP, because they omit the value of public services. Their statistical increase reflects the importance of the supply of privately offered health and education services.

The drastic absolute decline of the services GDP during the crisis of 1980-1988 only induces a slight change in its internal structure. The reduction in different subsectors was similar, goods and producer services are maintained at 35% of the total and those oriented towards consumption are reduced from 58.2% in 1980 to 55.3% in 1988, a magnitude that is absorbed by social services (see Table 5).

In the period of economic boom (1960-1980) an expansion in the service sector of the MAMC did not occur on the same magnitude as that of the developed countries. On the contrary, they lost ground during the expansion even though they increased in the metropolis compared to the nation as a whole, as will be seen in the following section. Education and private health care, on the contrary, gained ground during the crisis years even before the implementation of the neoliberal policies of the eighties. At the same time that this new model of development was being consolidated, we could have expected to see the expansion of private social services so as to reduce publicly provided services. However this did not occur to the degree expected since people's reduced incomes did not allow them to seek private services as they would have in times of strong economic growth, such as in the period of economic expansion previous the onset of the crisis.

The allocation of employment to the different subsectors of the tertiary sector of the MAMC differs from the shares they account for of the GDP. In the first place, the participation of producer services is significantly reduced, that is, in 1988 it accounts for 14.3 percent of service employment, and generates 35.5 percent of the service GDP, a difference of 250 percent, (see Tables 5 and 6). Additionally producer services show a marked decline in employment between 1960 to 1980 from 22.8% to 14.3% (see Table 6).

In contrast, the percentage of people employed in consumer services is bigger than its percentage participation in the GDP: in 1960 72.2% of the service work force produced 57.4% of the services GDP, while by 1988 70.4 percent of the service work force produced 55.3 percent of the services GDP (see Table 6). The rapid expansion of repair services which advance from 11.8% in 1960 to 20.5% in 1988 is notable, and probably due to the increase in ownership of consumer durables.

The considerable decline of personnel employed in producer services in Mexico City is offset by an increase in private social services: education and culture triple their employment from 4.9% in 1960 to 15.8% in 1988 (see Table 6). This increase in employment does not result in a proportional increase in value - an indicator of the degree of labor intensity of these services.

In conclusion, the comparison between level of employment and proportion of GDP clearly reflects the modern character of producer services, that present in 1988 a modest participation in personnel (14.3%) contrasts with a higher participation in the services GDP (35.5%). In contrast, consumer and social services are labor-intensive and are less able to incorporate technological innovations.

2. SPATIAL CONCENTRATION

Mexico has not experienced the transformation to services in the economy or the increasing importance of the tertiary sector to nearly the same degree as developed countries have. Rather we see the rate of industrialization has slowed without being concomitantly offset by a growth in the services, a situation that creates some doubt about the efficacy of the present neoliberal model. However a full interpretation of this data is beyond the scope of the chapter, which is only interested in determining the level and degree of concentration of services in the MAMC and the differences among the different types.

In 1960 43.5% of the total national GDP in services was concentrated in the MAMC, a much higher figure than the 14% of the country's population that lived there. For the three largest sectors of the service structure, the MAMC has 54.3% of the producer services of the county and, 47.6% of the private social services. Only consumer services are below average at 38.1% (see Table 7). As one might expect services of durable goods has the high percentage of 51.2% of the country's total, with the department stores (822) at 64.1%, being the most represented. In producer services, professional services for business accounts for 62.2% of the total, and industrial equipment sales for 60.4%. These latter are the most concentrated and undoubtedly represent service for the national market, being more easy "exportable" than personal services (see Table 7).

The lower percentages of concentration in the MAMC are in sales of consumer non durables, with the lowest level of concentration in hotels, motels and inns, with 24.3% of the national total. These last are proportional to the 38.5% that Mexico City has of the Mexican urban population in 1960. The practical absence of services in the rural zones of the country confirms the high socio-economic inequalities between the urban and rural sectors, which are reflected in the concentration of consumption in the urban areas and, especially, in the capital.

In 1970 the concentration of services in the MAMC rose to 45.5%, with an increase of producer services to 57.2% of GDP. Professional services, with 67.3%, is the branch with the highest concentration, followed by department stores (see Table 7). Mass media and information services are 54.4% in the capital city area while consumer services increase in importance and social services decrease (see Table 7).

By 1980 the concentration of services in the MAMC decreases to 43.2% of the national GDP, this is, to the level of 1960. Producer services are notably reduced, especially in wholesale and industrial equipment businesses. Notwithstanding, professional business services continue increasing until reaching 69.6% of the country's total (see Table 7).

The economic crisis that began in 1982, and the liberalization policies that opened Mexico to international commerce policy exemplified by the entry of Mexico into the GATT in 1986, brought about a real diminution of the economic importance of the MAMC. In terms of the service sector, the participation of the metropolis fell from 43.2% in 1980 to 36.1% in 1988 (see Table 7). Only 4 of the 16 types of service saw their participation rise in this critical period (732, 822, 832, and 834); while the remaining 12 decreased their participation. Recreational activities (833) and hotels (835) were drastically reduced while immediate consumer services fell with the reduction of purchasing power.

The concentration in the MAMC of employed personnel and the number of establishments of the service sector presents some interesting peculiarities. The percentage concentration of employment is less than the percentage value of GDP, being 36.6% in 1960, 34.8% in 1970, 33.9% in 1980 and 27.9% in 1988 (see Table 8). Between 1960-1980 it is noted that while the proportion of GDP generated by services in the MAMC remained high the percentage employed came down by 2.6 percent. Its services maintained their value but reduced their labor intensity, meaning that the MAMC was able to develop productive, modern services. Nevertheless, between 1980-1988 employment was greatly reduced, from 33.9% to 27.9% (see Table 8). The number of establishments as a percentage of the total in the country is lower than both the percentage of the GDP and employment, and it decreases throughout the period of the crisis. Between 1980-1988, it falls from 27.9% to 24.6%, declining 11.8% (see Table 9). The lower number of establishments suggests that they were getting bigger and these two facts together characterize the modernization of the sector in Mexico City, consistent with the kind of large firm development we find in London and Paris.

In summary, Mexico's service activities were highly concentrated in Mexico City until 1980, but the level of concentration dropped by 1988 as a reflection of the economic crisis and the loss of the captive national market, due to the elimination of the high protectionist barriers which had existed until Mexico joined the GATT.

3. EXPANSION AND COLLAPSE

The absolute increase of the tertiary GDP in Mexico City between 1960-1980 and its fall in 1980-1988, can be analyzed in terms of the annual growth rates of the 16 considered branches. This is what I do in this last section of the study, linking the expansion and collapse of services with that of the manufacturing industry and the population growth of the metropolis.

The rate of annual growth of the services GDP in the MAMC rose during the period of rapid economic growth in Mexico at the rate of 7.7% in 1960-1970 and 6.0% in 1970-1980 (see Table 10).

Breaking the services sector down into service types, one can see that between 1960-1970 social services grew fastest, at a rate of 10.9%, followed by consumer services with 8.2% and, finally, producer services at 6.5%, i.e. at less the average rate of service growth. The greatest increase in employment during the same period was in consumer services which in 1970 absorbed almost 75% of the total service employment. The slow growth of producer services was caused by slow sales of industrial equipment which grew at the low rate of 2.7% annually, while wholesale commerce and professional services grew considerably faster (see Table 10).

Between 1970 -1980 the growth rate goes down to 6.0% annually and there are changes in the growth rates of the different types of services. However, the most notable change occurs between 1980-1988, when the tertiary GDP diminishes 2.7% annually, reflecting the economic crisis in the Mexican capital. In producer services, negative growth in the wholesale business (-7.5% annually), and in professional services (-46% annually), and near stagnation in sales of industrial equipment effectively curtails the growth of producer services (see Table 10).

In consumer services, recreation (833), and hotels (835), suffer the most from the crisis, presenting annual reductions of 12.9% and 9.9%, due to their high income elasticities derived from the fact that they are not necessary for the survival of the population. But social services grow 1.9% annually with a rise of 4.0% in health, services, and expense with a very high income inelasticity.

The strong impact of the crisis on the tertiary GDP contrasts with the low reduction in the employed population at 0.6% annually. Six branches enjoy employment growth (721, 732, 821, 823, 911 and 921; see Table 11). The growth of employment in certain types of services during the severe economic crisis reflects the appearance of small family businesses due to the lack of salaried employment in the formal sector . The number of service establishments grows 2.4% annually in the years of the crisis (1980-1988), something more than what was experienced in 1970-1980, the decade of rapid growth (see Table 12). This occurs primarily in restaurants and repair shops, activities that allow for the existence of small businesses with non-paid family manual labor.

The economic crisis of Mexico City in the eighties does not only occur in services, but in general. The transformation industry suffers a near collapse and reduces its participation in the national GDP from 43.3% in 1980 to 32.1% in 1988, a reflection of the drastic decrease of the industrial GDP from 95,809.9 billion pesos (1988=100) to 74,276.9 billion, this is, a fall in production of 29%[8]. The number of employees in this sector goes down from 981,000 to 733,000 and the number of establishments from 35,351 to 29,351 (see Garza, 1991:211). The industrial crisis of the capital of Mexico is, therefore, more profound than in services, but together they were a vicious circle.

The impact of the external debt crisis and the entrance of Mexico into GATT caused considerable de-industrialization in Mexico which principally affected the capital of Mexico City[9]. The fall of industrial production directly reduced the demand for producer services, and of consumer services due to the decrease in number and real wage of the industrial workers. This, in turn, affected the demand of industrial articles, continuing the downward spiral.

The dramatic decline in economic activities in Mexico City caused, in turn, a decline in its attractiveness for potential immigrants, illustrating the theoretical link between job growth and population growth. The capital of Mexico, the metropolis which benefited most from the policy of import substitution and from the protection of the internal market until 1982, found itself in the most severe economic crisis of its modern history due to the impact of the neoliberal reforms which opened Mexico to the international market.

The demographic effect of the economic decline cannot be easily established because of the difficulties in comparing the 1980 and 1990 censuses. Considering the official figures for both censuses, the MAMC only increased its population from 14.4 to 14.6 million inhabitant, that is, at a rate of 0.1% annually. If this was true, the economic crisis stopped the strong population growth of earlier decades. This could only be possible if the capital experienced a rate of emigration of about 2%.

Zero demographic growth rate of Mexico City between 1980-1990 contradicts the immediate evidence of the expansion of the urban area in the southern and western delegations (Tlalpan, Xochimilco, Contreras, Alvaro Obregón and Cuajimalpa), as with the integration of the three minor municipalities of the state of Mexico (Melchor Ocampo, Tepozotlán and Tultepec; possibly also Acolmán and Tezoyuca have been incorporated).

It is more reasonable to suggest that the population of the MAMC was 12.9 million in 1980, according to the justification in footnote 1 in this study, and that in 1990 it had around 15.3 million inhabitants[10]. The growth rate would then be 1.7% annually, in comparison with 4.5% between 1970-1980 calculated with the new population of 12.9 million for this last year[11].

My demographic estimates set aside the hypothesis of null growth of the population of the MAMC between 1980-90 that the census shows, as well as the necessary implication of an annual emigration rate of close to 300,000 people. At the same time my estimates highlight the drastic reduction of population growth of the 1980s to less than half of that of the seventies. The estimated rate of 1.7% is accounted for by natural increase, and for the first time in the twentieth century Mexico City has a net migratory balance of zero.

The economic crisis which Mexico City experienced in the eighties, even given my demographic re-estimates which make population declines less dramatic than in the census unquestionably represented a structural constraint to a historical growth dynamic that would have made the metropolis the most populated city of the planet in 1990. The deep economic recession of the eighties obviated this dubious privilege. In spite of having four million inhabitants fewer than was projected, at the present time its ecosystem shows such clear signs of a grave deterioration that puts in risk its viability as a metropolitan center despite the reduced population.

In fact, a strong recommendation of this writer would be to take advantage of these moments of occurrence of economic and demographic decline in Mexico City in the eighties, to put into effect a realistic strategy of decentralization which would relieve pressure on the economy, and facilitate Mexican development, as it moves more and more into the international economy without the burden of an immense population.

REFERENCES

Browning, Harley, Singelmann, Joachim (1978), "The Transformation of the U.S. Labor Force: the Interaction of Industry and Occupation", Politics and Society, 8, pp. 3-4.

Garza, Gustavo and Erika Aguilar (1988), "Evolución industrial de la Ciudad de Mexico, 1821-1985", in Carlos Alba (ed.), Historia y desarrollo industrial de Mexico, CONCAMIN, Mexico.

Garza, Gustavo (1991), "Dinamica industrial de la Ciudad de Mexico, 1940-1988", Estudios Demográficos y Urbanos, El Colegio de Mexico, Mexico, Vol. 6, Num. 1, enero-abril (16).

TABLE 1

MEXICO: GROSS DOMESTIC PRODUCT BY BRANCH OF ECONOMIC ACTIVITY

1930-1990 (in thousands of millions of 1990 pesos)

Year	Total	Agric a	Mining	Oil b	Manuf	Constr	Electric	Transp	Comm	Servicec
1930	31,845	5,977	1,926	1,023	4,091	811	234	865	10,033	6,885
1940	43,270	8,393	1,609	1,161	6,666	1,083	328	1,100	13,380	9,550
1950	77,197	14.797	1,612	2,286	13,200	2,806	574	2,528	24,372	15,023
1960	140,885	22,213	2,137	4,752	26,774	5,657	1,392	4,630	43,443	29,887
1970	278,162	32,003	2,649	11,746	62,718	12,587	4,964	8,706	87,564	55,223
1980	560,376	49,110	6,981	40,187	106,625	30,087	8,169	40,850	140,236	138,132
1989	650,117	49,374	23,280	26,258	116,336	31,457	9,823	42,253	165,780	185,556
1990	677,867	50,302	24,099	27,495	124,883	34,519	10,147	44,937	172,203	189,312
PERCENTAGES
1930	100.0	18.76	6.05	3.21	12.85	2.55	0.73	2.72	31.51	21.62
1940	100.0	19.41	3.72	2.68	15.40	2.50	0.76	2.54	30.92	22.07
1950	100.0	19.18	2/09	2/96	17.1	3.63	0.74	3.27	31.57	19.46
1960	100.0	15.76	1.52	3.37	19.00	4.02	0.99	3.29	30.84	21.21
1970	100.0	11.51	0.95	4.22	22.55	4.53	1.78	3.13	31..48	19.85
1980	100.0	8.75	1.25	7.17	19.03	5.37	1.46	7.29	25.03	24.65
1989	100.0	7.60	3.58	4.04	17.89	4.84	1.51	6.50	25.50	28.54
1990	100.0	7.41	3.56	4.06	18.42	5.09	1.50	6.63	26.40	27.93

Source: Leopoldo Solís La realidad económica mexicana: retrovisión y perspectivas. Siglo XXI, Eds., México, décima edición, 1980, Tables III-1, pp. 90-93. These data are based on 1960 prices (1960=100), and are transformed into prices of 1990 (=100). The data for 1980 were obtained from SPP Sistemas de cuentas Nacionales de México, 1981 (México, 1982). This information is based on 1990 prices (1990=100). The data for 1989 and 1990 were obtained from INEGI Avance de Información Económica. August, 1990, (México, 1991). The information for 1980 is given in 1990 prices.

^a Includes agriculture, livestock production, forestry and fishing

^b In order to calculate petroleum production from 1950 to 1980, I added up group 06 from Mining (extraction of crude oil and natural gas) and groups 33 and 34 (petroleum derivatives, and basic petrochemicals respectively). For the years 1989 and 1990, because there are no disaggregated reports, I chose division 5 of manufacturing which includes branches 33 (petroleum and derivatives), 34 (basic petrochemicals), 35 (synthetic resins), 39 (artificial fibers), 40 (other chemical products), 41 (rubber products) and 42 (plastic products)

^c Includes other services and government.

TABLE 2

METROPOLITAN ZONE OF MEXICO CITY: GDP IN SERVICES

1960-1988 (in billions of constant pesos, 1988-100)

Group		Branch of Activity		1960	1970	1980	1988
I		Producer Goods and Services		5,454.6	10,279.7	18,394.8	14.804.8
1		Professional Services
721		Business services		1,071.4	2,243.6	5.331.3	3,659.6
2		Capital & Intermediate goods		4,383.2	8,036.1	13,063.4	11,145.2
731		Services to Wholesalers		2,023.7	4,947.8	4,826.5	2,578.0
732		Services of heavy equipment		2,359.5	3,088.3	8,236.9	8,567.2
II		Consumer Goods and Services		7,947.7	17,558.3	30,222.2	23,072.4
3		Nondurable goods		1,302.4	2,763.0	5,803.9	4,114.3
811		Food, drink and tobacco		962.9	2,120.9	4,640.5	3,334.4
812		Gasoline & fuels		339.5	642.1	1,163.4	780.0
4		Services for durable goods		2,497.8	5,297.9	8,254.4	7,877.1
821		Household and personal		1,680.5	2,225.5	4,438.4	4,727.0
822		Department stores		54.7	1,577.4	1,124.8	862.1
823		Automobiles and parts		762.6	1,495.0	2,691.2	2,288.0
5		Services for Nondurable		3,770.4	7,370.8	12,209.4	8,133.4
831		Preparation of food and drink		1,328.8	3,916.8	6,885.7	4,574.1
832		Janitorial and cleaning		1,197.8	1,448.5	978.5	1,329.4
833		Recreation		342.1	515.7	1,739.0	574.4
834		Mass media and information		257.4	505.3	724.8	840.2
835		Hotels, Motels and Inns		644.3	984.4	1,881.4	815.3
6		Servicing of durables
841		Repairs		377.1	2,126.6	3,954.5	2,947.5
III		Social Services		441.7	1,244.1	3,297.8	3,823.8
911		Education and entertainment		249.1	639.3	1,948.9	2,669.3
921		Health and personal maintenance		192.5	604.7	1,948.9	2,660.3
		TOTAL		13,844.0	29,082.0	51,914.7	41,701.0

Source: The information for this table was calculated by adjusting the data of the commercial census to the values of the national accounts. Briefly, the procedure was as follows: 1) calculate for each census activity group the participation of the Metropolitan Area of Mexico City (MACM) in the national total, ii) multiplying the value obtained by the national total (in the national accounts) for the group, thereby obtaining a new value for the MACM, iii) with the new figures obtained for each group, recalculating the figure for the delegations and municipios according to their participation in the commercial and service censuses. The original information was obtained from INEGI, Sistema de Cuentas Nacionales de México, 1960-1985. (México, 1987; Sistemas de Cuentas Nacionales de México, 1985-1988, México, 1990, y IV, VI, VII and IX Censos Comerciales y de Censos de Servicios.

TABLE 3

METROPOLITAN ZONE OF MEXICO CITY: EMPLOYMENT BY BRANCH, 1960-88

Group		Branch of Activity		1960	1970	1980	1988
I		Producer Goods and Services		119,768	234,416	241,018	235,345
1		Professional Services
721		Business services		26,976	63,465	70,457	78,124
2		Capital & Intermediate goods		92,792	170,951	170,561	157,221
731		Services to Wholesalers		29,234	69,402	78,941	33,531
732		Services of heavy equipment		63,558	101,549	91,619	123,690
II		Consumer Goods and Services		378,781	891,931	1,245,918	1,156.030
3		Nondurable goods		90,342	174,313	232,682	190,594
811		Food, drink and tobacco		79,114	150,996	216,396	185,625
812		Gasoline & fuels		11,228	23,317	16,286	4,969
4		Services for durable goods		94,881	217,535	267,833	268,987
821		Household and personal		68,651	130,737	191,355	200,009
822		Department stores		10,622	52,926	37,349	24,526
823		Automobiles and parts		15,608	33,872	39,129	44,452
5		Services for Nondurable		131,417	270,148	394,503	360,476
831		Preparation of food and drink		28,841	58,982	111,216	110,293
832		Janitorial and cleaning		85,209	183,476	234,376	222,439
833		Recreation		4,377	10,639	14,153	6,894
834		Mass media and information		3,533	4,230	8,843	8,671
835		Hotels, Motels and Inns		9,457	12,822	25,915	12,179
6		Servicing of durables
841		Repairs		62,142	229,935	350,900	335,973
III		Social Services		25,959	67,130	237,401	251,325
911		Education and entertainment		14,386	42,342	163,962	175,842
921		Health and personal maintenance		11,573	24,787	73,439	75,484
		TOTAL		524,508	1,193,477	1,724,337	1,642,700

Source: Same as for Table 2

TABLE 4

METROPOLITAN ZONE OF MEXICO CITY: NUMBER ESTAB;LISHMENTS BY

BRANCH OF SERVICES, 1960-88

Group		Branch of Activity		1960	1970	1980	1988
I		Producer Goods and Services		19,466	31,168	18,436	25,634
1		Professional Services
721		Business services		6,621	13,629	8,008	13,351
2		Capital & Intermediate goods		12,845	17,539	10,428	12,283
731		Services to Wholesalers		4,788	6,543	4,339	3,671
732		Services of heavy equipment		8,057	10,997	6,089	8,612
II		Consumer Goods and Services		89,421	149,052	206,023	243,827
3		Nondurable goods		45,032	63,942	84,295	92,231
811		Food, drink and tobacco		43,241	61,622	83,542	91,951
812		Gasoline & fuels		1,791	2,320	753	280
4		Services for durable goods		20,736	38,418	63,283	80,184
821		Household and personal		17,776	31,768	59,998	74,227
822		Department stores		1,654	4,164	200	199
823		Automobiles and parts		1,307	2,487	3,085	5,758
5		Services for Nondurable		17,263	31,831	38,922	45,027
831		Preparation of food and drink		9,620	18,087	23,188	28,388
832		Janitorial and cleaning		6,425	11,281	12,488	13,900
833		Recreation		367	1,378	1,521	1,451
834		Mass media and information		158	235	573	697
835		Hotels, Motels and Inns		693	850	1,152	591
6		Servicing of durables
841		Repairs		6,390	14,862	19,523	26,385
III		Social Services		3,923	6,404	9,403	12,728
911		Education and entertainment		720	1,614	2,358	3,486
921		Health and personal maintenance		3,203	4,790	7,045	9,242
		TOTAL		112,811	186,625	233,862	282,189

Source: Same as for Table 2

TABLE 5

METROPOLITAN ZONE OF MEXICO CITY: GDP BY SERVICE BRANCHES 1960-88

Group		Branch of Activity		1960	1970	1980	1988
I		Producer Goods and Services		39.4	35.3	35.4	35.5
1		Professional Services
721		Business services		7.7	7.7	10.3	8.8
2		Capital & Intermediate goods		31.7	27.6	25.2	26.7
731		Services to Wholesalers		14.6	17.0	9.3	6.2
732		Services of heavy equipment		17.0	10.6	15.9	20.5
II		Consumer Goods and Services		57.4	60.4	58.2	55.3
3		Nondurable goods		9.4	9.5	11.2	9.9
811		Food, drink and tobacco		7.0	7.3	8.9	8.0
812		Gasoline & fuels		2.6	2.2	2.2	1.9
4		Services for durable goods		18.0	18.2	15.9	18.9
821		Household and personal		12.1	7.7	8.5	11.3
822		Department stores		0.4	5.4	2.2	2.1
823		Automobiles and parts		5.5	5.1	5.2	5.5
5		Services for Nondurable		27.2	25.3	23.5	19.5
831		Preparation of food and drink		9.6	13.5	13.3	11.0
832		Janitorial and cleaning		8.7	5.0	1.9	3.2
833		Recreation		2.5	1.8	3.3	1.4
834		Mass media and information		1.9	1.7	1.4	2.0
835		Hotels, Motels and Inns		4.7	3.4	3.6	2.0
6		Servicing of durables
841		Repairs		2.7	7.3	7.6	7.1
III		Social Services		3.2	4.3	6.4	9.2
911		Education and entertainment		1.8	2.2	2.6	2.8
921		Health and personal maintenance		1.4	2.1	3.8	6.4
		TOTAL		100.0	100.0	100.0	100.0

Source: Same as for Table 2
TABLE 6
METRPOLITAN ZONE OF MEXICO CITY : EMPLOYMENT BY BRANCH OF SERVICE SECTOR
1960-1988

Group		Branch of Activity		1960	1970	1980	1988
I		Producer Goods and Services		22.8	19.6	14.0	14.3
1		Professional Services
721		Business services		5.1	5.3	4.1	4.8
2		Capital & Intermediate goods		17.7	14.3	9.9	9.6
731		Services to Wholesalers		5.6	5.8	4.6	2.0
732		Services of heavy equipment		12.1	8.5	5.3	7.5
II		Consumer Goods and Services		72.2	74.7	72.3	70.4
3		Nondurable goods		17.2	14.6	13.5	11.6
811		Food, drink and tobacco		15.1	12.7	12.5	11.3
812		Gasoline & fuels		2.1	2.0	0.9	0.3
4		Services for durable goods		18.1	18.2	15.5	16.4
821		Household and personal		13.1	11.0	11.1	12.2
822		Department stores		2.0	4.4	2.2	1.5
823		Automobiles and parts		3.0	2.8	2.3	2.7
5		Services for Nondurable		25.1	22.6	22.9	21.9
831		Preparation of food and drink		5.5	4.9	6.4	6.7
832		Janitorial and cleaning		16.2	15.4	13.6	13.5
833		Recreation		0.8	0.9	0.8	0.4
834		Mass media and information		0.7	0.4	0.5	0.5
835		Hotels, Motels and Inns		1.8	1.1	1.5	0.7
6		Servicing of durables
841		Repairs		11.8	19.3	20.3	20.5
III		Social Services		4.9	5.6	13.8	15.3
911		Education and entertainment		2.7	3.5	9.5	10.7
921		Health and personal maintenance		2.2	2.1	4.3	4.6
		TOTAL		100.0	100.0	100.0	100.0

Source: Table 3
TABLE 7

METRTOPOLITAN ZONE OF MEXICO CITY: GDP BY BRANCH OF SERVICES

1960-88 (PERCENT OF NATIONAL TOTAL)

Group		Branch of Activity		1960	1970	1980	1988
I		Producer Goods and Services		54.3	57.2	48.2	43.7
1		Professional Services
721		Business services		62.2	67.3	69.6	45.3
2		Capital & Intermediate goods		52.7	54.8	42.8	43.3
731		Services to Wholesalers		45.8	55.4	39.0	28.1
732		Services of heavy equipment		60.4	53.9	45.4	51.6
II		Consumer Goods and Services		38.1	40.7	40.4	31.6
3		Nondurable goods		28.8	29.7	39.8	25.7
811		Food, drink and tobacco		27.7	30.4	37.2	24.9
812		Gasoline & fuels		32.7	27.8	55.5	30.2
4		Services for durable goods		51.2	46.3	38.6	34.8
821		Household and personal		52.9	43.7	37.6	29.4
822		Department stores		64.1	67.1	50.3	68.2
823		Automobiles and parts		47.1	37.4	36.6	43.3
5		Services for Nondurable		36.5	41.6	43.0	33.2
831		Preparation of food and drink		38.9	43.4	41.9	35.7
832		Janitorial and cleaning		46.6	49.8	54.5	68.7
833		Recreation		36.1	35.8	78.4	37.8
834		Mass media and information		34.9	54.4	60.4	64.0
835		Hotels, Motels and Inns		24.3	29.0	27.8	11.9
6		Servicing of durables
841		Repairs		33.7	45.6	37.6	29.4
III		Social Services		47.6	44.3	45.4	44.3
911		Education and entertainment		60.0	48.3	46.5	41.1
921		Health and personal maintenance		37.5	40.7	44.7	45.9
		TOTAL		43.5	45.5	43.2	36.1

Source: Table 2 and national statistics on service sector
TABLE 8

METROPOLITAN ZONE OF MEXICO CITY: EMPLOYMENT BY BRAANCH OF SERVICES

1960-1988 (Percent of national total)

Group		Branch of Activity		1960	1970	1980	1988
I		Producer Goods and Services		45.0	45.5	42.4	35.8
1		Professional Services
721		Business services		43.3	55.4	54.1	38.8
2		Capital & Intermediate goods		45.5	42.7	39.0	34.5
731		Services to Wholesalers		34.9	39.4	37.2	21.4
732		Services of heavy equipment		53.0	45.3	40.6	41.4
II		Consumer Goods and Services		34.7	32.7	31.7	25.9
3		Nondurable goods		23.1	21.8	24.5	20.6
811		Food, drink and tobacco		22.3	20.8	23.6	20.8
812		Gasoline & fuels		30.2	31.5	51.9	16.5
4		Services for durable goods		44.3	38.6	33.4	27.1
821		Household and personal		42.7	35.9	31.9	24.7
822		Department stores		59.5	55.5	45.1	49.0
823		Automobiles and parts		43.6	32.5	32.6	33.3
5		Services for Nondurable		39.3	35.5	37.2	30.4
831		Preparation of food and drink		30.0	31.6	32.6	28.4
832		Janitorial and cleaning		51.7	40.2	43.5	36.6
833		Recreation		22.6	24.1	32.0	23.7
834		Mass media and information		23.8	29.9	32.5	27.1
835		Hotels, Motels and Inns		24.3	21.4	24.1	9.5
6		Servicing of durables
841		Repairs		41.0	38.2	31.3	24.6
III		Social Services		34.9	35.3	40.8	32.7
911		Education and entertainment		31.8	34.9	42.6	37.7
921		Health and personal maintenance		39.8	35.9	37.2	25.0
		TOTAL		36.6	34.8	33.9	27.9

Source: Table 3 and employment statistics from national sources
TABLE 9

METROPOLITAN ZONE OF MEXICO CITY : NUMBER OF ESTABLISHMENTS BY BRANCH OF SERVICES (1960-1988 - Percentages of national total)

Group		Branch of Activity		1960	1970	1980	1988
I		Producer Goods and Services		38.8	42.4	35.3	29.8
1		Professional Services
721		Business services		33.2	42.6	36.6	28.5
2		Capital & Intermediate goods		42.5	42.3	34.4	31.4
731		Services to Wholesalers		33.8	40.3	35.6	34.3
732		Services of heavy equipment		50.2	43.6	33.6	30.6
II		Consumer Goods and Services		28.2	27.2	27.4	24.3
3		Nondurable goods		25.7	22.6	23.8	22.0
811		Food, drink and tobacco		25.5	22.5	23.8	22.1
812		Gasoline & fuels		30.6	25.9	31.2	11.4
4		Services for durable goods		39.4	37.5	34.2	27.4
821		Household and personal		38.3	37.1	34.9	27.5
822		Department stores		59.3	47.4	10.9	22.0
823		Automobiles and parts		38.1	30.9	27.1	27.1
5		Services for Nondurable		23.9	26.3	26.8	25.1
831		Preparation of food and drink		23.6	25.3	26.8	25.1
832		Janitorial and cleaning		23.6	24.3	24.6	24.3
833		Recreation		7.5	14.3	21.2	17.6
834		Mass media and information		7.5	9.1	15.9	15.3
835		Hotels, Motels and Inns		14.2	12.7	15.8	7.7
6		Servicing of durables
841		Repairs		36.5	35.8	28.9	23.2
III		Social Services		31.8	30.1	27.3	21.7
911		Education and entertainment		28.5	32.2	35.2	32.1
921		Health and personal maintenance		32.6	29.5	25.4	19.3
		TOTAL		29.7	29.1	27.9	24.6

Source: Table 4 & the national figures for number of establishments
TABLE 10

METRPOLITAN ZONE OF MEXICO CITY : GDP BY BRANCHES OF SERVICES

(Growth rates 1960-1988)

Group		Branch of Activity		1960-70	1970-80	1980-88
I		Producer Goods and Services		6.5	6.0	-2.7
1		Professional Services
721		Business services		7.7	9.0	-4.6
2		Capital & Intermediate goods		6.2	5.0	-2.0
731		Services to Wholesalers		9.4	-0.2	-7.5
732		Services of heavy equipment		2.7	10.3	0.5
II		Consumer Goods and Services		8.2	5.6	-3.3
3		Nondurable goods		7.8	7.7	-4.2
811		Food, drink and tobacco		8.2	8.1	-4.0
812		Gasoline & fuels		6.6	6.1	-4.9
4		Services for durable goods		7.8	4.5	-0.6
821		Household and personal		2.8	7.1	0.8
822		Department stores		40.0	-3.3	-3.3
823		Automobiles and parts		7.0	6.1	-2.0
5		Services for Nondurable		6.9	5.2	-5.0
831		Preparation of food and drink		11.4	5.8	-5.0
832		Janitorial and cleaning		1.9	-3.8	3.9
833		Recreation		4.2	12.9	-12.9
834		Mass media and information		7.0	3.7	1.9
835		Hotels, Motels and Inns		4.3	6.7	-9.9
6		Servicing of durables
841		Repairs		18.9	6.4	-3.6
III		Social Services		10.9	10.2	1.9
911		Education and entertainment		9.9	7.8	-1.8
921		Health and personal maintenance		12.1	12.4	4.0
		TOTAL		7.7	6.0	-2.7

Source: Based on the information in Table 2.
TABLE 11

METROPOLITAN ZONE OF MEXICO CITY: EMPLOYMENT BY SERVICE BRANCH

1960-1988 (Growth Rates)

Group		Branch of Activity		1960-70	1970-80	1980-88
I		Producer Goods and Services		6.9	0.3	-0.3
1		Professional Services
721		Business services		8.9	1.1	1.3
2		Capital & Intermediate goods		6.3	0.0	-1.0
731		Services to Wholesalers		9.0	1.3	-10.2
732		Services of heavy equipment		4.8	-1.0	3.8
II		Consumer Goods and Services		8.9	3.4	-0.9
3		Nondurable goods		6.8	2.9	-2.5
811		Food, drink and tobacco		6.7	3.7	-1.9
812		Gasoline & fuels		7.6	-3.5	-13.8
4		Services for durable goods		8.7	2.1	0.1
821		Household and personal		6.7	3.9	0.6
822		Department stores		17.4	-3.4	-5.1
823		Automobiles and parts		8.1	1.5	1.6
5		Services for Nondurable		7.5	3.9	-1.1
831		Preparation of food and drink		7.4	6.5	-0.1
832		Janitorial and cleaning		8.0	2.5	-0.7
833		Recreation		9.3	2.9	-8.6
834		Mass media and information		1.8	7.7	-0.2
835		Hotels, Motels and Inns		3.1	7.3	-9.0
6		Servicing of durables
841		Repairs		14.0	4.3	-0.5
III		Social Services		10.0	13.5	0.7
911		Education and entertainment		11.4	14.5	0.9
921		Health and personal maintenance		7.9	11.5	0.3
		TOTAL		8.6	3.7	-0.6

Source: Based on the information in Table 3.
TABLE 12

METROPOLITAN ZONE OF MEXICO CITY: NUMBER OF ESTABLISHMENTS BY

BRANCHES OF SERVICES, 1960-1988 (Growth rates)

Group		Branch of Activity		1960-70	1970-80	1980-88
I		Producer Goods and Services		4.8	-5.1	4.2
1		Professional Services
721		Business Services		7.5	-5.2	6.6
2		Capital & Intermediate goods		3.2	-5.1	2.1
731		Services to Wholesalers		3.2	-4.0	-2.1
732		Services of heavy equipment		3.2	-5.7	4.4
II		Consumer Goods and Services		5.2	3.3	2.1
3		Nondurable goods		3.6	2.8	1.1
811		Food, drink and tobacco		3.6	3.1	1.2
812		Gasoline & fuels		2.6	-10.6	-11.6
4		Services for durable goods		6.4	5.1	3.0
821		Household and personal		6.0	6.6	2.7
822		Department stores		9.7	-26.2	-0.1
823		Automobiles and parts		6.6	2.2	8.1
5		Services for Nondurable		6.3	2.90	1.8
831		Preparation of food and drink		6.5	2.5	2.6
832		Janitorial and cleaning		5.8	1.0	1.3
833		Recreation		14.1	1.0	-0.6
834		Mass media and information		4.0	9.3	2.5
835		Hotels, Motels and Inns		2.1	3.1	-8.0
6		Servicing of durables
841		Repairs		8.8	2.8	3.8
III		Social Services		5.0	3.9	3.9
911		Education and entertainment		8.4	3.9	5.0
921		Health and personal maintenance		4.1	3.9	3.5
		TOTAL		5.2	2.3	2.4

Source: Based on the information in Table 4.

[1] The present study was completed as part of the project "Macroeconomic Dynamics of the Service Sector ion Mexico City", which is being organized under my coordination with the participation of Javier Pescador and Jaime Sobrino. I thank the John Simon Guggenheim Foundation for the grant that was given to me to initiated this project, and I thank the Department of the Federal District (DDF) for the financial support necessary to continue it.

[2] Using the official information from the population census of 1980, the metropolitan area of Mexico City, made up of 16 delegations from the federal district and 17 municipalities from the state of Mexico, accounted for 14.4 million inhabitants. Considering that the data from the 1990 census for the same administrative units equals a total of 14.6 million people, it appears unlikely that the metropolis has only grown 0.1% annually. Investigating the accuracy of the 1980 information, it was found that the elevated data in the census survey were elevated by the effects of "omissions" in 10.1% of the delegations and 13.9% of the troublesome municipalities, compared to 4% "omissions" for the census as a whole. I decided to increase the raw census figures by 4% as was done with the rest of the country. In this way an estimate of the population of the MAMC is 12.9 million inhabitants for 1980. In order to simplify matters and for reasons of style, when referring to Mexico City in the text it always signifies the metropolitan area.

[3] The tertiary on service sector includes the branches of services, commerce, transportation and government. In this study only the branches of services and formal commerce, that is, the first two branches, are being considered. The study denominates these two as the service or tertiary sector for practical reasons, even though, undoubtedly, they constitute the most important (this does not apply to the information in Table 1 which includes all of the tertiary sector, strictly speaking). For the same reasons, it does not refer to the informal characteristic of tertiarization of Latin American economies.

[4] If the industrial revolution as a process is called "industrialization" (from industry > industrial > industrialization), with the same linguistic rationalization the revolution of services can be called "servicization".

[5] The following municipalities are included: 1) Naucalpan, 2) Tlalnepantla, 3) Atizapan, 4) Ecatepec, 5) Nezahualcoyotl, 6) La Paz, 7) Cuautitlán, 8) Cuautitlán Izcalli, 9) Tultiltlán, 10) Coacalco, 11) Chalco, 12) Chicoloapán, 13) Chimalhuacán, 14) Huixquilucan, 15) Iztapaluca, 16) Nícolas Romero, and 17) Tecamac.

[6] Basically, it uses the classification of Browning and Singelmann, excluding distribution services, and disaggregating consumer and producer services (see Browning and Singelmann, 1978:491).

[7] The North American definition is used which considers one billion the same as a thousand million. The values are at constant prices from 1988=100.

[8] The participation of 43.3% in 1980 is not the same as that cited in the beginning of the chapter (48.0%). This percentage (43.3) is an estimated figure via by the census information to the national accounts. The 48.0% is the non-adjusted census figure.

[9] The external debt devoured 9 billion dollars annually in interest before its renegotiation. The entry into GATT reduced the average import tax rate and implied the elimination quotas in 8,095 commodities which meant a reduction of the import taxes equivalent to 96% of the total.

[10] The 14.6 million inhabitants that represent the 1990 census for the 16 delegations and 17 urban municipalities of the state of Mexico are adjusted for underenumeration by 4%, including the population of the 3 municipalities that are integrated in the urban area, and extrapolating until June, 1990.

[11] The total population of the MAMC in 1970 was 8.3 million inhabitants and considering the official population of 14.4 million in 1980 it has an annual growth rate of 5.6%.